CLE: 2010: Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

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CLE: 2010: Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

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Gerry W. Beyer

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St. Mary's University School of Law San Antonio Texas Alumni Homecoming, St. Mary's University School of Law Alumni Homecoming

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2010-03-12

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St. Mary's University School of Law Alumni Homecoming

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AVOID BEING A DEFENDANT:

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ESTATE PLANNING MALPRACTICE AND
ETHICAL CONCERNS

GERRY W. BEYER
I

Governor Preston E. Smith Regents Professor of Law
Texas Tech University School of Law
1802 Hartford St.
Lubbock, TX 79409-0004
(806) 742-3990, exJ. 302
gwb@RrofessorBeyer.com
http://www.ProfessorBeyer.com
http://BeyerBlog.com

ST. MARY'S UNIVERSITY SCHOOL OF LAW 2010 HOMECOMING CLE

San Antonio, Texas
March 12, 2010

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© 2010 Gerry W. Beyer

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GERRY W. BEYER
Governor Preston E. Smith Regents Professor of Law
Texas Tech University School of Law
Lubbock, TX 79409-0004
(806) 742-3990, ext. 302
gwb@Professor Beyer.com
http ://www.ProfessorBeyer.com

EDUCATION
B.A., Summa Cum Laude, Eastern Michigan University (1976)
J.D., Summa Cum Laude, Ohio State University (1979)
LL.M., University of IlLinois (1983)
J.S.D., University of Illinois (1990)

PROFESSIONAL ACTIVITIES
Bar memberships: United States Supreme Court, Texas, Ohio (inactive status), Illinois (inactive status)
Member: The American College of Trust and Estate Counsel (Academic Fellow); American Bar
Foundation; Texas Bar Foundation; American Bar Association; Texas State Bar Association

CAREER HISTORY
Private Practice, Columbus, Ohio (1980)
Instructor of Law, University of Illinois (1980-81)
Professor, St. Mary's University School ofLaw (1981-2005)
Visiting Professor, Boston College Law School (1992-93)
Visiting Professor, University of New Mexico School of Law (1995)
Visiting Professor, Southern Methodist University School of Law (1997)
Visiting Professor, Santa Clara University School of Law (1999-2000)
Governor Preston E. Smith Regent's Professor of Law, Texas Tech University School of Law (2005- present)
Visiting Professor, LaTrobe University School of Law (Melbourne, Australia) (2008)
Classes taught include Estate Planning, Wills & Estates, Trusts, Property, U.C.C.

SELECTED HONORS AND ACTIVITIES

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Order of the Coif
Outstanding Professor Award- Phi Alpha Delta (Texas Tech University Chapter) (2009) (2007) (2006)
President's Excellence in Teaching Award (Texas Tech University) (2007)
Professor of the Year- Phi Delta Phi (St. Mary's University chapter) (2005)
Student Bar Association Professor of the Year Award - St. Mary's University (2001-2002) (2002-2003)
Russell W. Galloway Professor of the Year Award- Santa Clara University (2000)
Outstanding Faculty Member- Delta Theta Phi (St. Mary' s University chapter) (1989)
Distinguished Faculty Award- St. Mary's University Alumni Association (1988)
Outstanding Professor Award- Phi Delta Phi (St. Mary's University chapter) (1988)
Most Outstanding Third Year Class Professor- St. Mary's University (1982)
State Bar College- Member since 1986
Keeping Current Probate Editor, Probate and Property magazine (1992-present)
Guest lecturer on estate planning topics for attorney and non-attorney organizations

SELECTED PUBLICATIONS

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Author and co-author of numerous law review articles, books, and book supplements including WILLS,
TRUSTS, AND ESTATES: EXAMPLES AND EXPLANATIONS (4th ed. 2007); TEACHING MATERIALS ON ESTATE
PLANNING (3d ed. 2005); 9 & 10 TEXAS LAW OF WILLS (Texas Practice 2002); TEXAS WILLS AND ESTATES:
CASES AND MATERIALS (5th ed. 2006); TEXAS WILL MANuAL SERVICE; 12, 12A, & 12B WEST'S TEXAS
FORMS - ADMINISTRATION OF DECEDENTS ' ESTATES AND GUARDIANSHIPS (1996); 19-19 A WEST'S LEGAL
FORMS- REAL ESTATE TRANSACTIONS (2002); Pet Animals: What Happens When Their Humans Die?, 40
SANTA CLARA L. REv. 617 (2000); Estate Plans: The Durable Power ofAttorney For Property Management,
59 TEX. B.J. 314 (1996); Estate Plans: Enhancing Estate Plans with Multiple-Party Accounts, 57 TEX. B.J.
360 (1994); Enhancing Self-Determination Through Guardian Self-Declaration, 23 IND. L. REv. 71 (1990);
Statutory Will Methodologies- Incorporated Forms vs. Fill-in Forms: Rivalry or Peaceful Co-Existence?, 94
Dick. L. Rev. 231 (1990); Ante-Mortem Probate: A Viable Alternative, 43 ARK. L. REv. 131 (1990); The Will
Execution Ceremony- History, Significance, and Strategies, 29 S. TEx. L. REv. 413 (1988); Videotaping the
Will Execution Ceremony - Preventing Frustration of Testator 's Final Wishes, 15 ST. MARY'S L.J. 1 (1983).

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TABLE OF CONTENTS
I. INTRODUCTION .................................................................................................................................. 1
II. THE POTENTIAL OF MALPRACTICE LIABILITY FOR NEGLIGENT ESTATE
PLANNING ......................................................................................................................................... 1
A. Disgruntled or Omitted Beneficiary as Plaintiff................................................................................... I
1.
2.
3.
4.
5.
6.

The Privity Wall is Erected ................................................................. ............................................... 1
The Privity Wall Begins to Crack ........ .. ................. ................................... ........................... ... ........ .. 2
Texas Lower Courts Consistently Keep the Privity Wall in Good Repair ........... ..................... ........ 3
t,he
The Supreme Court of Texas Buttresses _ Privity Wall ........... ....................... .. ........................... ..4
The Appellate Courts Respect the Wall ....... ................................. ............................. ........................4
Attempts to Run Around the Wall .................. ................ .... .. ........ ...... ............................... ................ 5
a. Create Attorney-Client Relationship with Beneficiary............................................ .................. 5
b. Assert Negligent Misrepresentation .......... .................... .......... ................... ......... ...................... 6
c. Sue Under the Deceptive Trade Practices Act ........ .. .. ............ ........... ....................................... 7

B. Personal Representative of the Estate as Plaintiff................................................................................ 8

III. ESTATE PLANNING FOR BOTH SPOUSES .............................................................................. I 0
A. Models ofRepresentation for Married Couples ................................................................................. ll
1.
2.
3.
4.

Family Representation .................................... ............ ........... .. ...... ................... ................ .. ............. !!
Joint Representation ...... ...................... .. ....... ... ....................................... ................................ ......... 11
Separate Concurrent Representation of Both Spouses ....... ...... ...... ................................... ........... ... 12
Separate Representation ....................~ ......................................... ............. ........................................ l2

B. Dangers of Joint Representation .......................................................................................................... 12
1. Creates Conflicts of Interest ................, ... ................. ....... .. .......................................... .................. .. 12
a. Accommodating Non-Traditional Families ......................................................... .................... 13
b. Bias Toward Spouse if Past Relationship With Attorney Exists ...................... ....... ................ 13
c. Differing Testamentary Goals Between Spouses ... .................................... ............................. 13
d. Power Struggle Between Spouses .......... ....... .................. .. .................................. ....... ......... .... 13
e. Lack of Stability in the Marriage ............................................................................................. 13
f. Existence of Substantial Amount of Separate Property ........ .. ........... .... ............. ... .. .............. .. 14
2. Forces Release of Confidentiality and Evidentiary Privileges .... .... ................................................. 14
3. Discourages Revelation ofPertinent Information ...................................................... ..................... 14
4. Increases Potential of Attorney Withdrawal ....... ......................... ........... ............... ........ ..... .. ........... 14
5. Creates Conflicts Determining When Representation Completed ......... .................. ........................ 15
C. Recommendations ................................................................................................................................. 15
1. Representation of Only One Spouse .. ............................ ... ....................... ............... .. ........... .. .......... 15
2. Joint Representation ofBoth Spouses .... .......................... ......................................................... ...... 15
a. Full Disclosure .......................... .................................... ...................................... .................... 16
b. Oral disclosure .... ......... ......................... .......... ........ ........ ...... ......... ........... ...... ......... ... ......... ... 17
c. Written Disclosure ........................... ........................................................................................ 17

IV. REPRESENTATION OF NON-SPOUSAL RELATIVES ............................................................ 17

Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

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V. NAMING DRAFTING ATTORNEY, ATTORNEY'S RELATIVE, OR ATTORNEY'S
EMPLOYEE AS A BENEFICIARY ............................................................................................... 17
A. Effect on Validity of Gift ...................................................................................................................... 17
1. Presumption of Void Gift .......................... ................................................. ...... .. ............................. 18
2. Beneficiaries Within Scope ofVoid Preswnption ......... .................................................................. l8
3. Exceptions to Void Presumption ............................................ ...................................... ................... 18
4. The Jones v. Krown Case.............................................. .. .......... ....................................................... 19
B. Effect on Ethical Duties ......................................................................................................................... 19

VI. NAMING DRAFTING ATTORNEY AS A FIDUCIARY............................................................. 19
VII. NAMING DRAFTING ATTORNEY AS FIDUCIARY'S ATTORNEY .................................... 20
VIII. FIDUCIARY HIRING SELF AS ATTORNEY ........................................................................... 20
IX. ATTORNEY AS DOCUMENT CUSTODIAN ............................................................................... 20
X. CAPACITY OF REPRESENTATION ............................................................................................. 21

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A VOID BEING A DEFENDANT:
ESTATE PLANNING MALPRACTICE AND ETHICAL CONCERNS

I. INTRODUCTION
An estate planner may become a defendant in a case involving an estate he or she planned in two
main ways. First, the attorney may have performed his or her services in a negligent manner potentially
creating exposure to malpractice liability. Second, the attorney' s conduct may have lapsed below
ethically acceptable standards.
This article reviews the exposure an estate planner may have to malpractice liability and then focuses
the reader's attention on ethical issues that may arise while preparing or executing the plan. I hope that
by pointing out potentially troublesome areas, the reader will avoid the ramifications of drafting a flawed
estate plan or having a lapse of ethical good judgment which may lead to the frustration of the client's
intent, financial loss to the client or the beneficiaries, personal embarrassment, and possible disciplinary
action.

II. THE POTENTIAL OF MALPRACTICE LIABILITY FOR NEGLIGENT
ESTATE PLANNING
A. Disgruntled or Omitted Beneficiary as Plaintiff!

1. The Privity Wall is Erected
The potential malpractice liability of an attorney for negligence in estate planning is great since
estate planning requires an especially high degree of competence. See David Becker, Broad Perspective
in the Development of a Flexible Estate Plan, 63 IOWA L. REV. 751, 759 (1978) ("comparatively few
lawyers recognize the expertise and particular talents essential to estate planning"). A thorough
knowledge is required of many areas of the law: wills, probate, trusts, taxation, insurance, property,
domestic relations, etc. As one commentator has stated, "Any lawyer who is not aware of the pitfalls in
probate practice has been leading a Rip Van Winkle existence for the last twenty years." Robert E. Dahl,
An Ounce of Prevention- Knowing the Impact of Legal Malpractice in the Preparation and Probate of
Wills, DOCKET CALL 9, 9 (Summer 1981).
When errors with the will or the will execution ceremony are discovered during the testator's
lifetime, the testator's only loss is the cost of having another will prepared and executed (unless, of
course, tax benefits have been permanently lost). This is normally not the type of situation where
malpractice liability will be litigated. The attorney may be able to avoid becoming a defendant by simply
having the will re-executed without cost to the client and providing appropriate apologies for the
inconvenience.
The problem is that errors usually do not manifest themselves until after the client's death. At this
time, the testator's estate probably could sue the negligent attorney. However, the only damages would
J Portions of this section are adapted from
Prac. 3d ed. 2002).]

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GERRY W. BEYER, TEXAS LAW OF WILLS §§

53.1 & 53.10 (9 Tex.

Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

be the attorney' s fees paid for drafting the will since there would be no other diminution of the estate
funds caused by the error. Accordingly, if there is a flaw in the will or the will execution ceremony
causing the will to be ineffective and that flaw can be traced to the conduct of the attorney in charge, it is
the intended beneficiaries who now fmd themselves short-changed that are apt to bring a malpractice
action.
Until recently, attorneys did not have to fear actions by these injured beneficiaries because the
defense of lack of privity could be successfully raised. The general rule was that the attorney did not owe
a duty to an intended beneficiary because there was no privity between the attorney and the beneficiary.
This strict privity approach, however, is rapidly being replaced by the view that these beneficiaries may
proceed with their actions against the drafting attorney despite the lack of privity.
2. The Privity Wall Begins to Crack
In 1958, the Supreme Court of California overruled the strict privity requirement in Biakanja v.
Irving, 320 P.2d 16 (Calif. 1958), a case involving a notary public. The plaintiff received only a oneeighth intestate share of the decedent's estate rather than the entire estate because the attestation of the
will was improper. The court rejected the body of common law requiring privity and determined that the
imposition of a duty to third persons is a matter of policy and involves the balancing of six factors:


the extent to which the transaction was intended to affect the plaintiff;



the foreseeability of harm to the plaintiff;



the degree of certainty that the plaintiff su~ered injury;



the closeness of the connection between the defendant's conduct and the injury suffered;



the moral blame attached to the defendant' s conduct; and



the policy of preventing future harm.

The court concluded that the defendant must have been aware from the terms of the will itself that
the plaintiff would suffer the very loss which occurred if faulty solemnization caused the will to be
invalid. The court stated that such conduct needed to be discouraged and not protected by immunity from
civil liability as would have been the case if this plaintiff, the only person who suffered a loss, were
denied a valid cause of action. Accordingly, the notary was held liable for the difference between the
amount which the intended beneficiary would have received had the will been valid and the intestate
share.
Less than four years later, the California Supreme Court repeated essentially the same principle in
Lucas v. Hamm, 364 P.2d 685 (Calif. 1961), cert. denied 368 U.S. 987 (1962). The court held that an
attorney' s liability for preparing a will could extend to the intended beneficiary. The court reasoned that:
One of the main purposes which the transaction between defendant and the testator intended to
accomplish was to provide for the transfer of property to plaintiffs; the damage to plaintiffs in the
event of invalidity of the bequest was clearly foreseeable; it became certain, upon death of the
testator without change of the will, that plaintiffs would have received the intended benefits but for
the asserted negligence of defendant; and if persons such as plaintiffs are not permitted to recover
for the loss resulting from negligence of the draftsman, no one would be able to do so, and the
policy of preventing future harm would be impaired.
Id. at 688 (The court eventually held that the attorney was not negligent for failing to master a rule against
perpetuities problem.)

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

Most jurisdictions have followed these California cases and have held attorneys liable to the intended
beneficiaries. There are now fewer than ten states remaining that have retained the privity requirement in
estate planning cases. See Martin D. Begleiter, The Gambler Breaks Even: Legal Malpractice in
Complicated Estate Planning Cases, 20 GA. ST. U.L. REV. 277,281-82 (2003).
3. Texas Lower Courts Consistently Keep the Privity Wall in Good Repair
The Fourth Court of Appeals, in the case of Berry v. Dodson, Nunley & Taylor, P.C. , 717 S.W.2d
716 (Tex. App. -San Antonio 1986), writ dismissed by agreement, 729 S.W.2d 690 (Tex. 1987), became
the first Texas court to address the issue. The decedent had a will which named his wife and his children
by a former marriage as sole beneficiaries. While hospitalized with terminal cancer, the decedent hired
the defendant attorney to prepare a new will which would add his wife's children as beneficiaries, change
the trustees of the trusts to be set up for the benefit of the children, and leave his wife certain business
interests.
Decedent died about two months after the attorney's initial consultation in the hospital. The attorney
had prepared a draft of a new will but it was never executed. The old will was probated, making the
decedent's wife and children angry, and thus they brought a malpractice action against the attorney.
After examining the facts and concluding that no privity existed between the attorney and decedent's
wife and her children, the court held that this lack of privity precluded a negligence action by the intended
beneficiaries. The court recognized the growing trend in other jurisdictions to permit an intended
beneficiary to recover in the absence of privity, but it refused to break with the general Texas privity
requirement.
The Texas Supreme Court granted the intended beneficiaries a writ of error; however, before it could
be heard, the case was dismissed by agreement of the parties.
A subsequent court of appeals case on the same issue is Dickey v. Jansen, 731 S.W.2d 581 (Tex.
App.-Houston [1st Dist.] 1987, writ refd n.r.e.). The alleged negligence was the failure of the attorney
to draft a testamentary trust provision that would operate under Louisiana law for certain of testator's
Louisiana mineral interests. The majority followed Berry and did not allow the intended beneficiaries to
recover. The dissenting opinion by Chief Justice Evans, however, strongly argued that the intended
beneficiaries had stated a cause of action.
In Thomas v. Pryor, 847 S.W.2d 303 (Tex. App.-Dallas 1992), judgment set aside without
reference to the merits, 863 S.W.2d 462 (Tex. 1993), an intended beneficiary sued an attorney who
prepared decedent's will through a pro bono legal aid program. The will was not admitted to probate
because it was not witnessed. The court, consistent with prior cases, held that the lack of privity between
the attorney and the intended beneficiary barred the action. The court decided that the privity rule is
supported by public policy and that "disturbing consequences could occur if an attorney were held liable
to third parties." The court was concerned that liability to third parties "would inject undesirable selfprotective reservations into the attorney's counseling role." Id. (quoting Bell v. Manning, 613 S.W.2d
335,339 (Tex. Civ. App.-Tyler 1981, writ refd n.r.e.)).

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The Texas Supreme Court granted writ to decide whether the privity bar should be lifted. As in
Berry, the parties settled before the case could be heard. On the day set for oral argument, the court set
aside the judgment of the appellate court without reference to the merits and remanded the case to the trial
court for entry of judgment in accordance with the settlement agreement of the parties. Thomas v. Pryor,
863 S.W.2d 462 (Tex. 1993).
In Thompson v. Vinson & Elkins, 859 S.W.2d 617 (Tex. App.- Houston [1st Dist.] 1993, writ
denied), the residuary beneficiaries of decedent's will brought suit against the law firm hired by the
trustee to represent the decedent's estate and trust in distributing the trust's assets. The court held that the

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

beneficiaries did not have standing to bring a claim for professional negligence against the law firm
because they were not in privity with the law firm.

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4. The Supreme Court of Texas Buttresses the Privity Wall
In 1996, the Supreme Court of Texas finally decided the issue in Barcelo v. Elliott, 923 S.W.2d 575
(Tex. 1996), when it held that the beneficiaries do not have a claim against the drafting attorney. In
Barcelo, an attorney prepared an estate plan for a client. After the client's death, a probate court held that
an inter vivos trust included in the plan was invalid and unenforceable as a matter of law. The
beneficiaries sued the attorney for negligence and breach of contract. Consistent with prior Texas cases,
the lower courts and the Supreme Court of Texas dismissed the beneficiaries' claims because the
beneficiaries were not in privity with the attorney.
The court rejected the trend in other states to relax the privity barrier in the estate planning context.
The court held that
the greater good is served by preserving a bright-line privity rule which denies a cause of action to
all beneficiaries whom the attorney did not represent. This will ensure that attorneys may in all
cases zealously represent their clients without t4e threat of suit from third parties compromising
that representation.
Id. at 578. Allowing disappointed will and trust beneficiaries to sue

would subject attorneys to suits by heirs who simply did not receive what they believed to be their
due share under the will or trust. This potential tort liability to third parties would create a conflict
during the estate planning process, dividing the attorney's loyalty between his or her client and the
third-party beneficiaries.
!d.

The court provided the following example of this type of conflict.
Suppose * * * that a properly drafted will is simply not executed at the time of the testator' s death.
The document may express the testator' s true intentions, lacking signatures solely because of the
attorney's negligent delay. On the other hand, the testator may have postponed execution because
of second thoughts regarding the distribution scheme. In the latter situation, the attorney's
representation of the testator will likely be affected if he or she knows that the existence of an
unexecuted will may create malpractice liability if the testator unexpectedly dies.
!d.

The court's opinion "insulates an entire class of negligent lawyers from the consequences of their
wrongdoing." !d. at 579 (Comyn, J. dissenting opinion).
5. The Appellate Courts Respect the Wall
In Guest v. Cochran, 993 S.W.2d 397 (Tex. App.-Houston [14th Dist.] 1999, no pet.), the parents
hired an attorney who was a close friend of the preferred child. The slighted children alleged that the
attorney conspired with the preferred child so that the preferred child would obtain a disproportionate
amount of the parents' estates via an irrevocable inter vivos trust and other non-probate arrangements.
However, the parents never signed these instruments. The wills did not contain bypass trusts to save
estate taxes on the unified credit amount. In addition, the attorney did not advise the surviving spouse or
the executors of the deceased spouse' s estate that the surviving spouse could disclaim a portion of the
estate to reduce the size of her estate which would be subject to the estate tax upon her death. As a result,

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

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the estate of the second parent to die paid $60,000 in estate taxes. The trial court granted summary
judgment in favor of the attorney .
The appellate court affirmed the summary judgment on the slighted children's individual claims
against the attorney for malpractice following Barcelo. The court rejected the argument that Barcelo was
bad law and that the lower court should decide differently because of the ever changing landscape of
Texas law.
In Longaker v. Evans, 32 S.W.3d 725 (Tex. App.-San Antonio 2000, pet. withdrawn), the settlor
terminated an inter vivos trust resulting in certain assets passing to the settlor's brother instead of his son.
The son asserted that Brother, an attorney, violated his fiduciary duty to the settlor by assisting her to
terminate the trust. The appellate court determined that this claim failed for a variety of reasons. First,
the settlor was not damaged by the termination, even if it were improper, because all of the trust's assets
were in the settlor's estate. Second, Brother did not owe the son a duty because there was no attorneyclient relationship between Son and Brother. In addition, there was evidence showing the settlor was
acting upon her own wishes when she terminated the trust.
6. Attempts to Run Around the Wall
a. Create Attorney-Client Relationship with Beneficiary
The shield from liability attorneys acquired under Barcelo does not provide absolute protection.
Beneficiaries and attorneys may act with regard to each other to such an extent that an attorney-client
relationship actually exists which consequently eliminates the protection extended by Barcelo.

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The case of Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.-Houston [14th Dist.) 1997, writ
dism'd by agr), is instructive. The beneficiaries of the will sued the law firm hired by the executors
alleging malpractice on various grounds including the failure to reveal conflicts of interest. The law firm
asserted that this lawsuit must fail because there was no privity of contract between the law firm and the
beneficiaries (citing Barcelo) and because the law firm represented the executors personally, not the
beneficiaries (citing Huie v. DeShazo, 922 S.W.2d 920 (Tex. 1996)). The beneficiaries claimed, however,
that the parties acted in such a way to create an attorney-client relationship between the law firm and the
beneficiaries which then served as the basis for the suit. The jury found that an attorney-client
relationship existed between the law firm and the beneficiaries. After a detailed review of the evidence,
the appellate court held that there was sufficient evidence to support the jury's decision. Thus, the law
firm could be subject to liability for malpractice.
In Estate of Arlitt v. Paterson, 995 S.W.2d 713 (Tex. App.-San Antonio 1999, pet. denied), a
husband died leaving a 1983 will and a 1985 codicil which substantially reduced the size of the share of a
daughter, one of his four children. This daughter contested the will and codicil. The contest dragged on
for many years. His wife, individually and as the executor of her husband's will, along with the other
children sued the attorneys who drafted the will and codicil. They alleged that the attorneys represented
the husband and the wife jointly in preparing the estate plan and that they were negligent in so doing.
The attorneys responded that they were not liable for a variety of reasons such as lack of privity,
expiration of the period of limitations, and lack of subject matter jurisdiction. The trial court granted the
attorneys' motion for summary judgment without specifying a reason. The appellate court reversed.

The appellate court began its malpractice discussion by holding that the two year statute of
limitations for legal malpractice claims may not have expired because it does not begin to run until the
wife and the other children discover or reasonably should have discovered the wrongfully caused injury.
The attorneys had failed to conclusively prove that the wife and her other children filed their malpractice
claims more than two years after they discovered or reasonably should have discovered the wrongfully
caused injury. Thus, the trial court improperly granted the attorneys' motion for summary judgment.

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

The court then focused on privity. The court recognized that an attorney retained by a testator to
draft a will owes no professional duty of care to persons named as beneficiaries under the will. The court
concluded that the wife and her other children must establish that they were in privity of contract with the
attorneys to move forward with a malpractice claim. With regard to the other children, the court held that
there was no evidence that the husband was acting as the other children's agent when he consulted with
the attorney and there was no evidence that the attorneys represented the other children. Thus, the
summary judgment denying these claims was affirmed. Likewise, the summary judgment was proper
against the wife in her capacity as her husband's executor.
The court next examined the wife's personal claim for malpractice. Wife claimed that privity existed
between the wife and the attorneys because they jointly represented the wife and the husband in the estate
planning process. On the other hand, the attorneys argue that they represented only the husband and thus
there was no privity. The court determined that Barcelo would not prevent the wife's personal claim
because she could qualify as a represented beneficiary. "The Barcelo rule thus does not deny a cause of
action to one of two joint clients." !d. at 721. Accordingly, the trial court's summary judgment against
the wife personally was improper because there is a material issue of fact as to whether the attorneys
represented the wife as Well as her husband.

b. Assert Negligent Misrepresentation
Texas courts recognize the tort of negligent misrepresentation as described by § 552 of the
Restatement (Second) of Torts. Federal Land Bank Ass 'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex.
1991). "The elements of a cause of action for the breach of this duty are: (1) the representation is made
by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest; (2)
the defendant supplies ' false information' for the guidance of others in their business; (3) the defendant
did not exercise reasonable care or competence in obtaining or communicating the information; and (4)
the plaintiff suffers pecuniary loss by justifiably relying on the representation." Id. at 442.
In 1999, the Supreme Court of Texas held in the case of McCamish, Martin, Brown & Loejjler v.
F.E. Appling Interests, 991 S.W.2d 787 (Tex. 1999), that attorneys, just like other professionals, could
incur liability for negligent misrepresentation. The court explained that:
a negligent misrepresentation claim is not equivalent to a legal malpractice claim. * * * Under the
tort of negligent misrepresentation, liability is not based on the breach of duty a professional owes
his or her clients or others in privity, but on an independent duty to the nonclient based on the
professional's manifest awareness of the nonclient's reliance on the misrepresentation and the
professional' s intention that the nonclient so rely. * * * Therefore, an attorney can be subject to a
negligent misrepresentation claim in a case in which she is not subject to a legal malpractice claim.
* * * The theory of negligent misrepresentation permits plaintiffs who are not parties to a contract
for professional services to recover from the contracting professionals.

!d. at 792.
The case of Estate of Arlitt v. Paterson, 995 S.W.2d 713 (Tex. App.-San Antonio 1999, pet.
denied), appears to be the first case discussing negligent misrepresentation in a will drafting context.
Husband died leaving a 1983 will and a 1985 codicil which substantially reduced the size of the share of
one of his four children. This child contested the will and codicil. The contest dragged on for many years.
Wife, individually and as the executor of Husband's will, along with the other children sued the attorneys
who drafted the will and codicil. They alleged that the attorneys represented Husband and Wife jointly in
preparing the estate plan and that they were negligent in so doing. The attorneys responded that they
were not liable for a variety of reasons such as lack of privity, expiration of the period of limitations, and

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

lack of subject matter jurisdiction. The trial court granted the attorneys' motion for summary judgment
without specifying a reason. The appellate court reversed.
The appellate court began by recognizing that a plaintiff must show privity to prevail on a legal
malpractice claim. However, privity is not needed to establish a duty not to negligently misrepresent.
The court explained that a negligent misrepresentation claim is not the same as a malpractice claim and
that an attorney may be subject to a negligent misrepresentation claim even though the attorney is not
subject to a malpractice claim. The appellate court remanded these claims because the attorneys ' motion
did not address the negligent misrepresentation claims and thus it was error for the trial court to render
judgment against Wife and the other children.
c. Sue Under the Deceptive Trade Practices Act

The beneficiaries in Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex. App.-Houston [14th Dist.]
1997, writ dism 'd by agr.), sued the law firm under the Texas Deceptive Trade Practices Act. The law
firm challenged the lower court's finding that the beneficiaries were consumers under the Act. To qualify
as consumers, the beneficiaries must first "have sought or acquired the goods or services by purchase or
lease, and second, the goods or services purchased must form the basis of the complaint."
The court held that the beneficiaries were not consumers. The court was "not persuaded that the
Texas Legislature intended the Act to apply to causes of action by will beneficiaries against the attorneys
hired by the executors of the estate." The beneficiaries were merely "incidental beneficiaries" of the
contract between the law firm and the executors. This type of benefit is not enough to give the
beneficiaries consumer status. The court supported its holding with public policy arguments. For
example,
[i]f consumer status were conferred on estate beneficiaries, the existence of minor beneficiaries,
residual beneficiaries, or others similarly situated could extend the period of time in which an
action could be brought against attorneys hired by the executors for years after the representation
ended and the estate was closed. We find the public interest in the finality of probate proceedings
includes actions against attorneys who represent executors in the administration ofthe estate. A suit
against an attorney would necessarily involve revisiting the original administration of the estate,
and might very well affect the original distributions. Thus, public policy weighs against conferring
consumer status on estate beneficiaries.
Id. at 408-09.

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The court reached similar conclusions in Wright v. Gundersen, 956 S.W.2d 43 (Tex. App.-Houston
[14th Dist.] 1996, no writ). The testator' s will gave his IRAs to his children. However, this bequest was
ineffective because the testator's brother was designated as the beneficiary of the IRAs. The daughter,
both individually and as the executrix of the testator' s estate, sued the attorney who drafted the will for
violations of DTPA, breach of contract, and negligence for not advising the testator to make the
appropriate changes to the IRA beneficiary cards. The trial court granted summary judgment in favor of
the attorney .
The appellate court affirmed the summary judgment against the daughter individually. There was no
attorney-client relationship between the attorney and the daughter at the time of the alleged malpractice.
In addition, the daughter could not claim that she had standing to bring the action as a third party
beneficiary of the contract between the testator and the attorney. However, the court reversed the
summary judgment on the negligence claim against the daughter in her representative capacity because
the attorney failed to ask for it.

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

The appellate court also affirmed the trial court's summary judgment against the daughter on the
DTPA claim. The daughter, in her representative capacity, did not present proof to defeat the attorney's
summary judgment motion. The court also affirmed against the daughter in her individual capacity
because she did not qualify as a "consumer." The daughter did not hire the attorney to draft the
documents and did not pay the attorney.
In Guest v. Cochran, 993 S.W.2d 397 (Tex. App.-Houston [14th Dist.] 1999, no pet.) (discussed
above on page 4), the court affirmed the summary judgment on the slighted children's individual claims
against the attorney for violations of DTPA following Wright v. Gundersen. The slighted children were
not consumers because they did not seek or acquire any goods or services from the attorney. (Note that
effective September 1, 1995, the DTPA was amended to exempt most claims for damages based on the
rendering of legal services Texas Business & Commerce Code § 17.49. The claims in this case were
brought before the effective date of this amendment).

B. Personal Representative of the Estate as Plaintiff
When a personal representative brings an action against the drafting attorney for malpractice,
however, the privity shield is of no defensive value because the client was in privity with the attorney and
the personal representative is merely stepping into the client's position. The leading case demonstrating
this principle is Belt v. Oppenheimer, Blend, Harrison & Tate, Inc. 192 S.W.3d 780 (Tex. 2006), in which
the executors sued the attorneys who prepared the testator's will asserting that the attorneys provided
negligent advice and drafting services. The executors believed that the testator's estate incurred over $1.5
million in unnecessary federal estate taxes because of the malpractice. The briefs reveal that the main
problem was that the testator did not form a family limited partnership or take other steps which could
have led to a lowering of the estate's value.
Both the trial and appellate courts agreed that the executors had no standing to pursue the claim
because of lack of privity. Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., 141 S.W.3d 706 (Tex.
App.-8an Antonio 2004). The appellate court explained that privity was mandated by Barcelo and thus
the court had no choice but to affirm the trial court's grant of a summary judgment in favor of the
attorneys.
The Supreme Court of Texas reversed and held that "there is no legal bar preventing an estate's
personal representative from maintaining a legal malpractice claim on behalf of the estate against the
decedent's estate planners." The court did not express an opinion as to whether the attorneys' conduct
actually amounted to malpractice.
Below are some of the key points made by the court:
• Barcelo remains good law. The court did not overturn Barcelo. The court explained that an
attorney owes no duty to a non-client, such as a will beneficiary or an intended will beneficiary,
even if the individual is damaged by the attorney's malpractice. The court reiterated the policy
considerations supporting Barcelo:

[T]he threat of suits by disappointed heirs after a client's death could create conflicts
during the estate-planning process and divide the attorney's loyalty between the client
and potential beneficiaries, generally compromising the quality of the attorney's
representation. * * * [S]uits brought by bickering beneficiaries would necessarily
require extrinsic evidence to prove how a decedent intended to distribute the estate,
creating a "host of difficulties." * * * [B]arring a cause of action for estate-planning
malpractice by beneficiaries would help ensure that estate planners "zealously
represent[ed]" their clients.

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

• Policies are different regarding suits by personal representatives. The policy considerations
discussed above do not apply to suits by personal representatives. The court explained that
unlike cases "when disappointed heirs seek to dispute the size of their bequest or their omission
from an estate plan," these policy considerations do not apply "when an estate's personal
representative seeks to recover damages incurred by the estate itself." The court also pointed
out that "while the interests of the decedent and a potential beneficiary may conflict, a
decedent's interests should mirror those of his estate." The court wrapped up its opinion by
concluding that "[l]imiting estate-planning malpractice suits to those brought by either the client
or the client's personal representative strikes the appropriate balance between providing
accountability for attorney negligence and protecting the sanctity of the attorney-client
relationship."
• Possible "recasting" is possible. The court recognized the problem which may arise because a
beneficiary is often appointed as the estate's personal representative. The court's holding
creates "an opportunity for some disappointed beneficiaries to recast a malpractice claim for
their own 'lost' inheritance, which would be barred by Barcelo, as a claim brought on behalf of
the estate." The court minimized this possibility by stating that "[t]he temptation to bring such
claims will likely be tempered, however, by the fact that a personal representative who
mismanages the performance of his or her duties may be removed from the position." The court
also pointed out that any recovery goes to the estate, not the beneficiary, unless recovery flows
through to the beneficiary under the terms of the will.
• The decedent's personal representative has capacity and standing. The court explained that
it is well-accepted law that a decedent's personal representative has the capacity to bring a
survival action on behalf of the decedent's estate. The court then had to address an issue of first
impression in Texas, that is, does a legal malpractice claim in the estate-planning context
survive a deceased client. The court explained that the common law allowed causes of action
for acts affecting property rights to survive and that estate-planning negligence that results in
"the improper depletion of a client's estate involves injury to the decedent's property." Thus,
the court held that "legal malpractice claims alleging pure economic loss survive in favor of a
deceased client's estate." Consequently, the executors had standing to bring the malpractice
claim.
• Malpractice claim accrues during the decedent's lifetime. The court explained that the
alleged malpractice occurred during the testator's lifetime even though the alleged damage
(increased estate tax liability) did not occur until after the decedent's death. Thus, the court
disapproved a contrary holding in the lower court case of Estate of Arlitt v. Patterson, 995
S.W.2d 713, 720 (Tex. App.-San Antonio 1999, pet. denied). The court pointed out that the
testator could have brought the claim himself if he had discovered the malpractice prior to his
death and recovered his attorney's fees and the costs incurred to restructure his estate plan.
• Discovery rule applies running of statute of limitations. In a footnote, the court addressed
the issue of when the statute of limitations begins to run. The court stated that

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while an injury occurred during the decedent's lifetime for purposes of determining
survival, the statute of limitations for such a malpractice action does not begin to run until
the claimant "discovers or should have discovered through the exercise of reasonable care
and diligence the facts establishing the elements of [the] cause of action." * * * In this
case, the "claimant" may be either the decedent or the personal representative of the
decedent's estate.
The Supreme Court of Texas held in Smith v. O'Donnell, 288 S.W.3d 417 (Tex. 2009), that a
decedent's claim for legal malpractice, regardless of whether it involves the planning of the decedent' s

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

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estate or some other legal matter, survives and thus may be brought by the decedent's personal
representative. Executor sued Decedent's former Attorneys for malpractice in advising Decedent in his
capacity as the executor of his wife's estate. The lower court ruled in favor of Attorneys basing its
judgment on the fact that Decedent's executor and the estate lacked privity of contract with Attorneys.
The Supreme Court of Texas granted a petition for review without reference to the merits, vacated the
lower court's judgment, and remanded so the lower court could take into account the holding in Belt.
On remand, the Court of Appeals began its analysis by holding that Belt was not limited to estate
planning malpractice actions. Accordingly, the court explained that Executor stepped into Decedent's
shoes and could bring whatever malpractice action Decedent could have brought while alive, even if it did
not involve the planning of Decedent's estate. The court relied on language in the Belt decision which
provided that "legal malpractice claims alleging pure economic loss survive in favor of a deceased client's
estate." The court then examined the evidence and concluded that although there was no evidence that
Attorneys acted with malice or breached fiduciary duties, there was a triable issue as to what damages
were attributable to Attorneys' acts. The court remanded the case to the trial court to determine whether
Attorneys' acts amount to malpractice. O 'Donnell v. Smith, 234 S.W.3d 135 (Tex. App.-San Antonio
2007). Attorneys appealed.
The Texas Supreme Court affirmed. The court agreed with the Court of Appeals that Executor is in
the same position as Decedent. If Decedent had not died, Decedent could have brought the malpractice
action and thus Executor may bring the action on Decedent's behalf. The court explained that the
concerns about third-party malpractice suits (e.g., by disgruntled beneficiaries) do not apply in this type
of case as the estate's suit is the same as the one the client would have brought; the attorney-client
relationship is not jeopardized by the attorney considering the impact on a third party. 2
Under these cases, estate planners are subject to potential malpractice actions brought by the
personal representative of their client's estate. Whether a practitioner may achieve protection from this
liability is problematic. For example, must an estate planner review a detailed check-list of all estate
planning strategies (if such a list is even possible to create) with each client and have the client
affirmatively indicate that he or she understands the potential benefits of each technique but does not wish
to use it?

III. ESTATE PLANNING FOR BOTH SPOUSES

3

Today you are meeting with a new estate planning client. During the initial telephone contact, the
client indicated a need for a simple plan, "nothing too complex" were the exact words. As you enter your
reception area to greet the client, you are surprised to see two people waiting-the client and the client's
spouse. The client explains that the client wants you to prepare estate plans for both of them. Your mind
immediately becomes flooded with thoughts of the potential horrors of representing both husband and
wife. You remember stories from colleagues about their married clients who placed them in an awkward
position when one spouse confided sensitive information that would be relevant to the estate plan with the
admonition to "not tell my spouse." You also recall the professional ethics rules which prohibit
2 The court did not address whether the attorneys' actions constituted malpractice. A two-judge dissent asserted
that this case falls under the Barcelo v. Elliott, 923 S.W.2d 575 (Tex. 1996), rule which precludes a malpractice
action by a non-client (e.g., an unhappy beneficiary) against the decedent's attorney for malpractice because of lack
of privity.
3 Portions of this section are adapted from
3d ed. 2002).]

GERRY

W. BEYER, TEXAS LAW OF WILLS §§ 53.4 -53.7 (9 Tex. Prac.

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

representing clients with conflicting interests. What do you do? What is the best way to protect the
interests and desires of the client and the client's spouse and still avoid ethical questions as well as
potential liability?
This scenario is replayed many times each day in law offices across Texas and the United States.
The joint representation of a husband and wife in drafting wills and establishing a coordinated estate plan
can have considerable benefits for all of the participants involved. However, depending on the
circumstances, joint representation may result in substantial disadvantages to either or both spouses and
may subject the drafting attorney to liability. The attorney 's duties of loyalty and confidentiality in joint
representations, as well as how conflict situations should be handled, whether the conflict is apparent
initially or arises during the representation, can be gleaned from the Texas Disciplinary Rules of
Professional Conduct.

A. Models ofRepresentation for Married Couples
When a married couple comes to an attorney 's office for estate planning advice, the chances are that
they are unaware of the different forms of representation which are available or the specific factors they
must consider to determine which form of representation is appropriate. The attorney has the burden to
use his or her skills of observation and information gathering and apply the relevant professional conduct
rules to help the couple to make a choice that best fits their situation.
1. Family Representation

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Under the concept of family representation, the attorney represents the family as an entity rather than
its individual members. This approach attempts to achieve a common good for all of the participants and
thus the attorney's duty is to the family interest, rather than the desires of one or both of the spouses.
However, representation of the family does not end the potential for conflict between the spouses, instead
it broadens the potential basis of conflict by adding other family members to the equation. Further, even
where there is no conflict of purposes between the spouses, the attorney may feel an obligation to the
family to discourage or even prevent the spouses from effectuating their common desires where those
desires do not benefit the family as a whole (e.g., where the spouses choose not to take advantage of tax
saving tools, such as annual exclusion gifts, in favor of retaining the assets to benefit themselves). This
type of representation, at least for spousal estate planning purposes, is unnecessarily complicated and may
even frustrate the common desires of the spouses. This model of representation has not been clearly
recognized by the courts.
2. Joint Representation
Joint representation is probably the most common form of representation estate planners use to
develop a coordinated estate plan for spouses. Joint representation is based on the presumption that the
husband, wife, and attorney will work together to achieve a coordinated estate plan. In situations where
the attorney does not discuss the specific representative capacity in which he or she will serve, joint
representation serves as the "default" categorization. Despite its widespread acceptance, however, joint
representation has its pitfalls.

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A critical issue faced by an attorney who represents multiple parties is the attorney 's obligation to
make sure that the representation complies with the Texas Rules of Professional Conduct. Most relevant
in the joint representation of husband and wife is Rule 1.6 which prohibits representation where it
"involves a substantially related matter in which that person's interests are materially and directly adverse
to the interests of another client of the lawyer * * *" Additionally, the Rule provides that if in the course
of multiple representation such a conflict becomes evident, the lawyer must withdraw from representing
one or both of the parties.

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

The rule does, however, contain a savings clause which permits the attorney to accept or continue a
representation where a conflict of interest exists if (1) the attorney believes that the representation will not
be materially affected, and (2) both of the parties consent to the representation after full disclosure of all
of the potential disadvantages and advantages involved. Many attorneys, regardless of whether potential
conflicts are apparent, take advantage of this part of the rule and routinely disclose all advantages and
disadvantages and then obtain oral and/or written consent to the representation. This approach exceeds
the minimum requirements of the rule and helps protect all participants from unanticipated results. Of
course, there are still situations which cannot be overcome by disclosure and consent, such as where the
attorney gained relevant, but confidential, information during the course of a previous representation of
one of the parties. In this type of situation, the attorney has no choice but to withdraw from the joint
representation and recommend separate counsel for each spouse.
The dangers of joint representation are discussed in greater detail in § B, below.
3. Separate Concurrent Representation of Both Spouses
The theory of separate concurrent representation in a spousal estate planning context is that a single
attorney will undertake the representation of both the husband and the wife, but as separate clients. All
information revealed by either of the parties to the attorney is fully protected by confidentiality and
evidentiary privileges, regardless of the information' s pertinence to establishing a workable estate plan.
Thus, one spouse may provide the attorney with confidential information that undoubtedly would be
important for the other spouse to have in establishing the estate plan, but the attorney would not be able to
share the information because the duty of confidentiality would be superior to the duty to act in the other
spouse' s best interest. Proponents of this approach claim that informed consent given by the parties
legitimizes this form of representation. However, due to the confusion it creates for the attorney regarding
to whom the duty of loyalty is owed and whose best interest is to be served, it is hard to understand why
any truly informed person would consent. The dual personality that this form of representation requires
of the attorney has resulted in it being dubbed a "legal and ethical oxymoron." Geoffrey C. Hazard, Jr.,
Conflict of Interest in Estate Planning/or Husband and Wife, 20 PROB. LAW. 1, 11 (1994).
4. Separate Representation
A final option for the attorney and the married clients is for each of the spouses to seek his or her
own separate counsel. This approach is embraced by many estate planning attorneys as the best way to
protect a client's confidences and ensure that the client's interests are not being compromised or
influenced by another. By seeking independent representation, spouses forego the efficiency, in terms of
money and time spent, that joint representation offers, but they gain confidence that their counsel will
protect their individual priorities rather than be diluted by the priorities of the spouse. Additionally,
separate representation substantially decreases the potential that the attorney will be trapped in an ethical
morass because of unanticipated conflicts or unwanted confidences.

B. Dangers of Joint Representation
1. Creates Conflicts of Interest

A conflict of interest between the spouses or between the spouses and their attorney can arise for
many reasons. These conflicts often do not become apparent until well into the representation. If the
attorney is skillful (or lucky), the conflict can be resolved and the joint representation continued. In other
cases, however, the conflict may force the attorney to withdraw from representing one or both of the
spouses.

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

a. Accommodating Non-Traditional Families

With the frequency of remarriage and blended families in today's society, it is not surprising that
non-traditional families are a ripe source of conflict. A step-parent spouse may not feel the need or desire
to provide for children that biologically are not his or her own. This fact can come into direct conflict
with the expectations of the parent spouse who may feel that the children are entitled to such support and
that the step-parent spouse is just being selfish. Alternatively, the spouses may be in conflict over how
the estate plan should provide for "our" children, "your" children, and "my" children, and whether any of
these classifications should receive preferential treatment.
b. Bias Toward Spouse ifPast Relationship With Attorney Exists

Where one of the spouses has a prior relationship with the drafting attorney, regardless of whether
that relationship is personal or professional, there is a potential for conflict. The longer, closer, and more
financially rewarding the relationship between one of the spouses and the attorney, the less likely the
attorney will be free from that spouse's influence. See James R. Wade, When Can A Lawyer Represent
Both Husband and Wife in Estate Planning?, PROB. & PROP., March/April 1987, at 13. Because the
spouses rely on the attorney's independent judgment to assist them in effectuating their testamentary
wishes, it is important that neither of the parties has any actual or perceived disproportionate influence
over the attorney.
c. Differing Testamentary Goals Between Spouses

Spouses may also have different ideas and expectations regarding the forms and limitations of
support provided by their estate plan to the survivor of them, their children, grandchildren, and so forth.
By including need-based or other restrictions on property, one spouse may believe that the other spouse
will be "protected" while that spouse may view the limitations as unjustifiable, punitive, or manipulative.
If one spouse has children from a prior relationship, that spouse may wish to restrict the interest of the
non-parent spouse via a QTIP trust or other arrangement to the great dismay of the other spouse who
would prefer to be the recipient of an outright bequest. No one distribution plan may be able to satisfy
the desires of both spouses.
d. Power Struggle Between Spouses

One spouse may dominate the client side of the attorney-client relationship. If one spouse is
unfamiliar or uncomfortable with the prospect of working with an attorney or if one spouse is unable, for
whatever reason, to make his or her desires known to the drafting attorney and instead simply defers to
the other spouse, it will be difficult for the attorney to fairly represent both parties.
e. Lack ofStability in the Marriage

If the attorney seriously questions the stability of the marriage, it will be practically impossible to
create an estate plan which contemplates the couple being separated only by death. As one commentator
explained, "[N]o court would permit a lawyer to go forward when such a situation involves partners in a
partnership or the principals in a close corporation, or a trustee and beneficiary of a trust, or a corporation
and its officers. The courts will not take a different view when the clients are husband and wife."
Geoffrey C. Hazard, Jr., Conflict ofInterest in Estate Planning for Husband and Wife, 20 PROB. LAw. 1,
14 (1994).
The case ofln re Taylor, 67 S.W.3d 530 (Tex. App.-Waco 2002, no pet.), is instructive. A law
firm represented both the husband and wife in the preparation of their estate plans, including wills and
powers of attorney, as well as some business matters. Later, the law firm undertook to represent the

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

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husband in divorce proceedings against the wife. The wife sought to have the law firm disqualified from
representing the husband. The trial court denied her motion and she appealed.
The appellate court conditionally granted the wife's request for a writ of mandamus directing the
trial court to vacate the order denying her motion to disqualify the law firm. The record was clear that the
law firm represented both the husband and wife with regard to the business and estate matters and thus
there would be a conflict of interest for the law firm to represent the husband in the divorce action. The
wife did not consent to the law firm's representation of the husband in the divorce and thus the law firm is
disqualified. The trial court's failure to grant the wife's motion was a clear abuse of discretion.

f

Existence ofSubstantial Amount ofSeparate Property

Significant conflict may arise if one spouse has a separate estate that is of substantially greater value
than that of the other spouse, especially if the wealthier spouse wants to make a distribution which differs
from the traditional plan where each spouse leaves everything to the survivor and upon the survivor's
death to their descendants. The attorney may generate a great deal of conflict among all of the parties if,
to act in the best interest of the not-so-wealthy spouse, the attorney provides information regarding that
spouse's financial standing under the contemplated distribution, if the wealthy spouse were to die first.
Conflict may also exist in situations where one spouse wants to make a gift of property which the
other spouse believes is that spouse's separate property and therefore not an item which the first spouse is
entitled to give. The potential for this type of conflict is especially great where the spouses have
extensively commingled their separate and community property.
2. Forces Release of Confidentiality and Evidentiary Privileges
Joint representation may force spouses to forego their normal confidentiality and evidentiary
privileges. Disclosure of all relevant information is the only way to work toward the common goal of
developing an effective estate plan. In subsequent litigation between the spouses regarding the estate
plan, none of the material provided to the attorney may be protected. However, release ofthese privileges
protects the attorney by eliminating the potential conflict between the attorney's duty to inform and the
duty to keep confidences.
3. Discourages Revelation ofPertinent Information
The fact that there is no confidentiality between the spouses in joint representation situations may
not be a problem if the spouses have nothing to hide and have common estate planning goals. On the
other hand, joint representation can place one or both of the spouses in the compromising position of
having to reveal long held secrets in the presence of his or her spouse, e.g., the existence of a child born
out-of-wedlock. Even worse is the scenario where the spouse withholds the information leaving the other
spouse vulnerable and unprotected from the undisclosed information which, if known, may have resulted
in a significantly different estate plan.
4. Increases Potential of Attorney Withdrawal
A potential conflict which becomes an actual conflict during the course of representation may not
prevent the attorney from continuing the representation if the spouses previously gave their informed
consent. However, if the conflict materially and substantially affects the interests of one or both of the
spouses, the attorney must carefully consider the negative impact that the conflict will have on the results
of the representation and on the attorney's independent judgment. The prudent action may be withdrawal.
A midstream withdrawal can be very disruptive to the estate planning process and result in a substantial
Joss oftime (and even money) to both the spouses and the attorney.

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5. Creates Conflicts Determining When Representation Completed
There is some question as to whether a spouse who sought joint representation in the creation of his
or her estate plan can, at a later date, return to the same attorney for representation as an individual. The
determination as to when the joint representation ends is quite settled with respect to subsequent attempts
to unilaterally revise the estate plan-it does not end. Any subsequent representation of either spouse
which relates to estate planning matters would constitute information that the attorney would be obligated
to share with the other spouse/client. Regarding other legal matters, representation "should be undertaken
by separate agreement, maintaining a clear line between those matters that are joint and those matters that
are individual to each client." Teresa Stanton Collett, And the Two Shall Become One ... Until the
Lawyers Are Done, 7 NOTRE DAME J.L. ETHICS & PUB. POL'Y 101, 141 (1993).
C. Recommendations

Decisions regarding the form of representation most appropriate for a husband and wife seeking
estate planning assistance could be made by the attorney alone, based on his or her past experiences,
independent judgment, and skills of observation regarding the potential for conflict between the spouses.
The better course of action is for the attorney to explain the choices available to the spouses along with
the related advantages and disadvantages and then permit the spouses to decide how they would like to
proceed. The only two viable options are joint representation and representation of only one spouse. See
Malcolm A. Moore, Representing Both Husband and Wife Ethically, ALI-ABA EST. PLAN. COURSE MAT.
J., April 1996, at 5, 7. As previously mentioned, representation of the family as an entity and separate
concurrent representation by one attorney are appropriate forms of representation for a husband and wife
only in extremely rare cases.
1. Representation ofOnly One Spouse
This form of representation allows each of the spouses to be fully autonomous in dealing with their
attorney. Only the information the client spouse is comfortable with sharing is revealed to the other
spouse. As one commentator explained, "it [separate representation for each spouse] is consistent with
the present dominant cultural view of marriage as a consensual arrangement and is most consistent with
the assumptions about the attorney-client relationship." Teresa Stanton Collett, And the Two Shall
Become One ... Until the Lawyers Are Done, 7 NOTREDAMEJ.L. ETHICS & PUB. POL'Y 101, 128 (1993).

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Where it is obvious to the attorney that the couple would be best served by this style of
representation, it is the attorney's responsibility to convince the couple of this fact. Examples of facts that
alert the attorney that separate representation is probably the best choice include situations where the
marriage was not the first for either or both of the parties, where there are children from previous
relationships, where one party has substantially more assets than the other, and where one spouse is a
former client or friend of the consulted attorney.
When recommending separate representation, the attorney should take care to point out that this
suggestion is not an inference that their relationship is unstable or that one or both parties may have
something to hide. Instead, it is merely a reflection that each spouse has his or her own responsibilities,
concerns, and priorities which may or may not be exactly aligned with those of the other spouse.
Accordingly, and the best way to achieve a win-win result and reduce present and future family conflict is
for each spouse to retain separate counsel.
2. Joint Representation of Both Spouses
Despite the potential dangers to clients and attorneys alike, joint representation is the most common
form of representation of husband and wife for estate planning matters. With appropriate and routine use

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of waiver and consent agreements, the attorney may undertake this type of representation with a minimum
of risk to the attorney and a maximum of efficiency for the clients. Unfortunately, however, use of
disclosure and consent agreements is far from a standard procedure. One survey revealed that over forty
percent of the estate planning attorneys questioned do not, as a matter of practice, explain to the couple
the potential for conflict that exists in such a representation, much less put such an explanation in writing.
One attorney stated that he only felt it was necessary to discuss potential conflicts where the
representation involved a second or more marriage, and that he only put it in writing if he felt a real
problem was indicated in the first meeting. Another respondent failed to disclose the potential for conflict
because he was afraid it would appear as if he were issuing a disclaimer for any mistakes he might make.
Finally, it seems that denial of the existence of potential conflicts occurs on the part of the attorney as
well as the spouses, as evidenced by one practitioner's statement, "I have a hard time believing that I
should tell clients who have been married for a long time and who come in together to see me that there
may be problems if they get a divorce." Francis J. Collin, Jr., et al., A Report on the Results of a Survey
About Everyday Ethical Concerns in the Trust and Estate Practice, 20 ACTEC NOTES 201 (1994).

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The ABA Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 05434 which address conflicts which may arise when an attorney represents several members of the same
family in estate planning matters.
The Opinion validates the common practice of one lawyer representing several members of the same
family . The basis of this authorization is that the interests of the parties may not be directly adverse and
that more than conflicting economic interests are needed before the attorney may not represent both.
The Opinion recognizes, however, that current conflict of interest may result even without direct
adversity if there is a significant risk that representation of one client will materially limit the
representation of another.
Despite the "permission" granted by this Opinion, I continue to think the representation of more than
one family member in estate planning matters is problematic. A potential conflict may turn into a real
conflict at a later time leaving the attorney in an untenable position. It is simply not worth the risk. I
believe it is better for a lawyer to owe 100% of his or her duties to one and only one family member.
There will then never be doubt whom the attorney represents or what actions the attorney should take if
something "gets sticky," True, practitioners may lose some business and some clients may have higher
legal fees but I believe this is preferable to the alternative.
Many attorneys, nonetheless, will continue to represent spouses jointly. Attorneys who do so are
strongly recommended to (1) provide the spouses with full disclosure and (2) obtain the spouses' written
informed consent, regardless of the perceived potential for conflict.

a. Full Disclosure
Informed consent is not possible without full disclosure. Because estate planning attornexs often
meet one or both of the spouses for the first time the day of the initial appointment, it is not possible for
the attorney to know more about the couple than what he or she sees and hears during the interview.
Because there is no way to be sure which specific issues are relevant to the spouses, it is extremely
important for the attorney to discuss as many different potential conflicts as are reasonably possible.
Even if the attorney has some familiarity with the couple, it is better to cover too many possibilities than
too few.
The amount of disclosure that must be provided for the consent given to be considered "informed" is
different for each client. The attorney has the responsibility to seek information from the parties to be
sure that all relevant potential conflicts are addressed as well as the effects of certain other incidents, such
as divorce or death of one of the spouses. It is also a good idea to include a discussion of the basic

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ground rules of the representation detailing exactly what is and is not confidential, rights of all parties to
withdraw, and other procedural matters such as attendance at meetings and responsibility for payment of
fees.
b. Oral disclosure
An oral discussion of potential conflicts which exist or which may arise between the couple will

allow the attorney to gather information about the clients while disseminating information for them to use
in making their decisions. Oral disclosure also permits a dialogue to begin which may encourage the
clients to ask questions and thereby create a more expansive description of the advantages and
disadvantages of joint representation as they apply to the couple.
c. Written Disclosure

Though there is no rule or standard which requires that disclosure or the clients' consent be
evidenced by a written document, the seriousness and legitimacy that go along with a signed agreement
serve as additional pro~ection for all participants. By documenting the disclosure statement and each
client's individual consent to the joint representation, the couple may be forced to reconsider the
advantages and disadvantages of joint representation and may feel more committed to the agreement.
Additionally, if there are any issues which they do not feel were addressed in the document, they may be
more likely to express them so that the issue can also be included in the agreement. Finally, reducing the
agreement to written form helps protect the attorney should any future dispute arise regarding the
propriety or parameters of the representation.

IV. REPRESENTATION OF NON-SPOUSAL RELATIVES
Representation of more than one family member raises a number of ethical concerns such as
avoiding conflicts of interest, maintaining confidences, and preserving independent professional
judgment. These issues are analogous to those discussed with regard to the representation of both
spouses. The safest course of action would be to decline to represent two individuals from the same
family, especially a parent and his or her child.

V. NAMING DRAFTING ATTORNEY, ATTORNEY'S RELATIVE, OR
ATTORNEY'S EMPLOYEE AS A BENEFICIARY
Attorneys are often asked by family members, friends, and employees to prepare wills, trusts, and
other documents involved with the gratuitous transfer of property. These same individuals may also want
the attorney to name him- or herself as one of the beneficiaries of the gift. This common occurrence is
fraught with legal and ethical problems, that is, the attorney may not be able to claim the gift and may be
subject to professional discipline.
A. Effect on Validity of Gift

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Under Roman law, the drafter of a will could take no benefit under the will. See Elmo Schwab, The
Lawyer As Beneficiary, 45 TEX. B.J. 1422 (1982) (discussing ancient doctrine of "qui se scrip sit
heredem"). The common law of Texas law did not follow this strict approach. Instead, these
circumstances gave rise to an inference of undue influence which the attorney could rebut by showing
either that (l) the testator was related to the attorney by blood or marriage, or (2) the testator actually

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

desired the attorney to be a beneficiary. For example, in Oglesby v. Harris, 130 S.W.2d 449,451 (Tex.
Civ. App.-Austin 1939, writ dism'd judgmt cor.), the court permitted the attorney to receive the
property because "the estate was of practically nominal value, and the beneficiary [attorney] was an old
friend and benefactor of the deceased, to whom the deceased was largely indebted if not in fact legally, at
least morally, for assistance rendered in his dire extremity."
In 1997, the Texas Legislature removed all discretion from the court to decide the propriety of a
testamentary gift from a client to the drafting attorney when it added § 58b to the Texas Probate Code.
The section was designed to reduce overreaching by attorneys who prepare wills in which they or closely
connected individuals are named as beneficiaries. The statute has been amended several times as the
Texas Legislature attempts to fine-tune which gifts to deem void and when a close family relationship
between the testator and the beneficiary will permit a gift to take effect despite the self-serving nature of
the transaction. Here is a brief explanation of the operation of the statute as of the conclusion of the 2005
Legislature (the 2007 and 2009 Legislatures did not amend this statute).
1. Presumption ofVoid Gift
A gift to the drafting attorney or a person closely related to attorney is void.
2. Beneficiaries Within Scope of Void Presumption
Gifts to the following individuals are presumed void:


Attorney who prepares the will.



Attorney who supervises the preparation of the will.



Parent of the attorney.



Descendent of the attorney's parent (e.g., child, grandchild, brother, sister, niece, nephew,
etc.)



Employee of the attorney



Spouse of any of the above individuals

Note how many closely related beneficiaries (e.g., grandparents, aunts, uncles, cousins) are not
within the scope of the void presumption.
3. Exceptions to Void Presumption
Gifts to the following individuals are permitted:


Beneficiary is the testator's spouse (attorney may write a self-beneficiary will for his/her
spouse).



Beneficiary is the testator's ancestor or descendant (attorney may write a self-beneficiary
will for his/her parent, grandparent, child, grandchild, etc.).



Beneficiary is related to the testator within the third degree of consanguinity or affinity
(attorney may write a self-beneficiary will for his/her brother, sister, aunt, uncle, etc.).

Note that if a bona fide purchaser buys property for value from a beneficiary with a void gift, the
purchaser is protected.

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

4. The Jones v. Krown Case

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In Jones v. Krown, 218 S.W.3d 746 (Tex. App.-Fort Worth 2007, pet. denied), Attorney drafted a
will for Testator which named Paralegal (an independent contractor) as both a beneficiary and as the
executrix. After Testator died, his sister filed a motion for a declaratory judgment to set aside the gift to
Paralegal under Probate Code § 58b which states that a testamentary gift to "employee of the attorney
who prepares or supervises the preparation of the will is void." Both the trial and appellate courts agreed
that Paralegal's gift was void and that the property passed via intestacy to his sister.
The court was unimpressed with Paralegal's arguments that § 58b did not apply to her. The court
found it irrelevant that Paralegal was not involved with the drafting of Testator's will and that she was not
present when Testator executed the will. In addition, her technical status as an "independent contractor"
did not keep her from falling within the purview of the term "employee" as used in the statute. Because
§ 58b does not define the term, the court relied on the "plain and common meaning" of the word, that is,
someone who works for someone else and receives payment for that work. Because Paralegal worked for
Attorney and was paid for her work, she qualified as an employee. The court also explained that the
application of§ 58b to void Paralegal's gift "is consistent with the Legislature' s intent* * * which was to
avoid having an interested person use his position of trust to benefit himself." !d. at 749.

B. Effect on Ethical Duties
Texas Disciplinary Rule of Professional Conduct 1.08(b) prohibits a lawyer from preparing a will
not only if the attorney is a beneficiary, but also if the beneficiary is the attorney's parent, child, sibling,
or spouse. There are two exceptions to the general admonition.
The first exception is when the client is related to the donee. Although permitted, the prudent
attorney should avoid drafting for relatives unless the disposition in the will is substantially similar to that
which would occur under intestacy. Note also that it is uncertain how "related" should be defined, i.e., by
blood and/or by marriage, and how close of a relationship is sufficient.
The second exception is if the gift is not substantial. It is uncertain what "substantial" means. Does
it depend on size of the testator's estate or the size of beneficiary' s estate? For example, 75% of a small
estate may be a very small amount whereas 1% of a large estate may be huge vis-a-vis the attorney's own
holdings. Accordingly, a prudent attorney should not rely on this exception to excuse a self-beneficiary
will.

VI. NAMING DRAFTING ATTORNEY AS A FIDUCIARY
The former Ethical Considerations provided that "[a] lawyer should not consciously influence a
client to name him as executor [in a will]. In these cases where a client wishes to name his lawyer as
such, care should be taken by the lawyer to avoid even the appearance of impropriety." STATE BAR OF
TEXAS, ETHICAL CONSIDERATIONS ON CODE OF PROFESSIONAL RESPONSIBILITY, EC 5-6 (1972). This
rule was interpreted to mean that a lawyer may be named as the executor for an estate "provided there is
no pressure brought to bear on the client, and such appointments represent the true desire of the client."
State Bar of Texas, Comm. on Interpretation of the Canons of Ethics, Op. 71 (1953).

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Despite the authority to do so, the attorney must exercise great care to avoid potential claims of
overreaching or conflict of interest. See Howard M. McCue Ill, Flat-Out of the Will Business-A Recent
Malpractice Case Results in an Expensive Settlement for Both Lawyer and Executor, TR. & EST., Sept.
1988, at 66 (discussing San Antonio lawsuit which was settled when law firm agreed to pay over $4
million to plaintiff; the attorney who drafted the will had named attorneys employed by the firm as

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executors). It is wise to have the client sign a plain language disclosure statement which explains the
ramifications of the attorney serving as the executor. See Larry W. Gibbs, The Lawyer 's Prof ssional
e
Responsibility in Estate Planning and Probate-Common Solutions and Practical Problems, in STATE
BAR OF TEXAS, PRACTICAL WILL DRAFTING AND REPRESENTING THE ESTATE AND BENEFICIARIES IN

HARD TIMES, ch. F, 2-6, 24-26 (1987) (includes sample disclosure form).
It is not uncommon for a will to have a provision which exonerates the executor from liability for
acts of ordinary negligence. A standard such clause is: "No executor shall be liable for its acts or
omissions, except for willful misconduct or gross negligence." These exculpatory clauses are generally
upheld by Texas courts. See Corpus Christi Nat'/ Bank v. Gerdes, 551 S.W.2d 521 (Tex.Civ.App.Corpus Christi 1977, writ refd n.r.e.).

However, if the executor was also the attorney who drafted the will it is not clear whether such a
clause would be upheld in light of Rule 1.08(g) of the Texas Disciplinary Rules of Professional Conduct
which states, "A lawyer shall not make an agreement prospectively limiting the lawyer's liability to a
client for malpractice unless permitted by law and the client is independently represented in making the
agreement, or settle a claim for such liability with an unrepresented client or former client without first
advising that person in writing that independent representation is appropriate in connection therewith."

VII. NAMING DRAFTING ATTORNEY AS FIDUCIARY'S ATTORNEY
The Model Rules do not prohibit at attorney from including a provision directing a fiduciary to retain
a particular lawyer's services. Most wills and trusts, however, do not contain these types of provisions
and thus the inclusion of such a clause may raise suspicions that the attorney improperly influenced his or
her client. In addition, many courts will treat this type of provision as merely being precatory and thus
not binding on the fiduciary .

VIII. FIDUCIARY HIRING SELF AS ATTORNEY
A fiduciary with special skills may be tempted to employ him- or herself to provide those services to
the estate or trust. For example, the trustee may be an attorney, accountant, stockbroker, or real estate
agent. If the trustee succumbs to the temptation, the trustee will create a conflict of interest situation. As
a fiduciary, the trustee should seek the best specialist possible within the trust's budget. However, as a
specialist, the trustee wants to get the job and secure favorable compensation. Dual roles permit the
trustee to engage in schizophrenic conversations such as, "This is too complicated for my trustee mind so
I need to consult myself using my attorney brain."
Courts typically presume that self-employment is a conflict of interest and thus do not permit trustees
to recover extra compensation for the special services. However, the court may permit the trustee to
receive compensation in dual capacities if the trustee can prove that the trustee acted in good faith for the
benefit of the trust and charged a reasonable fee for the special services.

IX. ATTORNEY AS DOCUMENT CUSTODIAN
It is important for estate planning documents to be stored in appropriate locations. If documents are
not available to the appropriate person when needed, the client may lose the benefits of executing the
documents. The disposition of an executed document is simple in some cases. For example, a medical

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Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns

power of attorney should be delivered to the agent. In other cases, however, the proper receptacle for the
document is less easily ascertained.

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The proper disposition of a will is often a controversial issue. The original will should normally be
stored in a secure location where it may be readily found after the testator's death. Thus, some testators
keep the will at home or in a safe deposit box, while others prefer for the drafting attorney to retain the
will. The attorney should not suggest retaining the original will because the original is then less
accessible to the testator. When the drafting attorney retains a will, the testator may feel pressured to hire
the attorney to update the will and the executor or beneficiaries may feel compelled to hire that attorney
to probate the will. Some courts in other jurisdictions hold that an attorney may retain the original will
only "upon specific unsolicited request of the client." State v. Gulbankian, 196 N.W.2d 733, 736 (Wis.
1972).
If a will contest is likely, the client must be informed of the dangers of retaining the will, i.e., it
increases the opportunity for unhappy heirs to locate and then alter or destroy the will. The attorney may
need to urge the testator to find a safe storage place that will not be accessible to the heirs, either now or
after death, but yet a location where the will is likely to be found and probated while simultaneously
making certain not to suggest that the attorney retain the will.

X. CAPACITY OF REPRESENTATION
The Supreme Court of Texas has ruled that when an attorney represents a fiduciary, such as an
executor or a trustee, the true client is the fiduciary personally, not the beneficiary, estate, or trust. In Huie
v. DeShazo, 922 S. W .2d 920 (Tex.1996). Beneficiary of a trust sought to discover various
communications between Trustee and Trustee's Attorney. Attorney claimed these communications were
protected under Texas Rule of Civil Evidence 503. The lower court rejected Attorney's assertion and
demanded that Attorney disclose the communications. Attorney filed a writ of mandamus.
The Supreme Court of Texas conditionally granted the writ. The court held that Attorney owed
duties toward Attorney 's client, i.e., Trustee, and not toward Beneficiary. Thus, Beneficiary could not
discover communications between Trustee and Attorney protected by the attorney-client privilege.
Notwithstanding Trustee's fiduciary duty to Beneficiary, only Trustee is the client of Attorney . Trustee's
fiduciary duty of full disclosure to Beneficiary did not trump the attorney-client privilege.
The opinion extensively discussed the public policies supporting this holding. "A trustee must be
able to consult freely with his or her attorney to obtain the best possible legal guidance. Without the
privilege, trustees might be inclined to forsake legal advice, thus adversely affecting the trust, as
disappointed beneficiaries could later pore over the attorney-client communications in second-guessing
the trustee's actions. Alternatively, trustees might feel compelled to blindly follow counsel's advice." Jd.
at 924. The court acknowledged the trend evident in other jurisdictions to hold that the client in a
fiduciary setting is actually the beneficiary, not the trustee or executor. The court also rejected arguments
that the attorney's client is actually the trust, rather than the fiduciary .

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Citation

Gerry W. Beyer, “CLE: 2010: Avoid Being a Defendant: Estate Planning Malpractice and Ethical Concerns,” St. Mary's Law Digital Repository, accessed August 16, 2017, http://lawspace.stmarytx.edu/item/STMU_HomecomingCLE2010Beyer.

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